Introduction

The board of directors conducts the
group’s business with integrity by
applying appropriate corporate
governance policies and practices in the
group.

MultiChoice is a major subsidiary of
Naspers Limited, a company listed on
the JSE and the London Stock
Exchange. It therefore aims to comply,
where appropriate, with guidelines in the
King Report on Corporate Governance
for South Africa 2009 (King III). The
implications of the new Companies Act,
No 71 of 2008, in South Africa (signed
into law on 8 April 2008 and effective
1 May 2011), are being analysed.

MultiChoice has an independent board
of directors, which has established its
own governance practices and
subcommittees that comply in the main
with the applicable governance and
regulatory requirements. The board’s
audit, risk and remuneration and equity
committees fulfil key roles in ensuring
good corporate governance in the
group. The group uses independent
external advisors to monitor regulatory
developments, locally and internationally,
to enable management to make
recommendations to the board on
matters of corporate governance.

Application of and approach to
King III

The board and its subcommittees made
good progress in embedding the
appropriate principles and practices of King III. The board approved revised
board and subcommittee charters. The
responsibilities of the audit and risk
committees were separated and a new
risk committee formed.

The composition of subcommittees was
reviewed and, where required, amended.

The formalisation of our risk
management processes was a major
focus. Details of the enterprise-wide risk
management framework appear here.

In accordance with the overriding
principle in King III of apply or explain,
the board, to the best of its knowledge,
believes the group has applied or is
embedding processes in support of the
relevant principles of King III.

King III provides that directors should
have a working understanding of the
effect of applicable laws, rules, codes
and standards on the company and its
business.

The company does not interpret these
provisions to mean that the board should
have legal expertise in all spheres in
which the company operates or be
familiar with all laws applicable to the
company and its various businesses.
However, the board does ensure
adequate structures and systems are
in place and populated with people of
sufficient competence for compliance
with the relevant laws. The board further
manages corporate governance via its
audit and risk committees, which monitor the proper operation of such
structures and systems and report to the
board.

Status: New Companies Act

The impact of the new South African
Companies Act No 71 of 2008 (signed
into law on 8 April 2008, and effective
1 May 2011) was a focus over the past
year. To achieve compliance with the
new act, shareholders will be asked to
appoint the members of the audit
committee and consider special
resolutions on the provision of loans and
other financial assistance. A new
memorandum of incorporation is being
drafted and will be brought to
shareholders for consideration and
approval at the appropriate time. The
new act provides transitional
arrangements in terms of which
MultiChoice has until 1 May 2013 to
adopt a new memorandum of
incorporation.

Business ethics statement

MultiChoice is formalising its compliance
and ethics management process. The
code of ethics and business conduct
was revised during the year. A copy
of the code is available on www.multichoice.co.za.

This code applies to all directors and
employees in the group. Ensuring group
companies adopt appropriate processes
and establish supporting policies and
procedures is an ongoing process.
Management focuses on policies and
procedures that address key ethical
risks, such as conflicts of interest, accepting inappropriate gifts and
acceptable business conduct.

The remuneration and equity committee
acts as the overall custodian of business
ethics. The disciplinary codes and
procedures of the various companies are
used to ensure compliance with policies
and practices that underpin the overall
code of ethics and business conduct.
Unethical behaviour in business by
senior staff members is reported to this
committee as well as the manner in
which the company’s disciplinary code
was applied in such instances.

MultiChoice is committed to conducting
its business on the basis of complying
with the law, with integrity and with
proper regard for ethical business
practices. It expects all directors and
employees to comply with these
principles and, in particular, to avoid
conflicts of interest, illegal anticompetitive
activities, bribery and
corruption.

Whistle-blowing facilities are in place
enabling employees to anonymously
report unethical business conduct in the
workplace.

Compliance framework

MultiChoice has established a legal
compliance programme formalising
practices that have been followed for
some time. The programme involves
preparing and maintaining inventories of
material laws and regulations applicable
to each business unit, implementing
policies and procedures based on these laws and regulations, establishing
processes to control and supervise
compliance and mitigate risks,
monitoring compliance, implementing
effective training and awareness
programmes and reporting to the board
and management on the effectiveness of
compliance efforts.

The compliance programme is under the
control of legal counsel, Khululiwe
Ntshangase, acting in this instance as
compliance officer together with a
compliance committee. The compliance
committee reports on its compliance
efforts to the compliance officer who, in
turn, reports to the risk committee.

Litigation in the various business units is
reported to the compliance officer who,
in turn, reports regularly on material
litigation matters to the board and risk
and audit committees.

The board

Composition

MultiChoice has a unitary board, which
fulfils oversight and controlling functions.
The board has a charter evidencing a
clear division of responsibilities. The
majority of board members are nonexecutive
directors and independent of
management, to ensure that no one
individual has unfettered powers of
decisionmaking and authority. The roles
of chair and chief executive are separate.

During the year Mr Nolo Letele was
appointed as executive chairman and
Mr Imtiaz Patel was appointed as chief
executive, and as a member of the
board. Mr Khulu Sibiya, an independent
non-executive director, fulfils the role of
lead director in all matters not dealt with
by the executive chair, including
managing conflicts of interests.

At 31 March 2011 the board comprised
five independent non-executive directors,
four non-executive directors and two
executive directors. Six directors (55%)
are from previously disadvantaged
groups and two directors (18%) are
female.